Area stocks stage major comeback

The year 2013 will be remembered as one where stocks staged a major comeback.

Low interest rates continued to send cash toward stocks as a gradually improving economy combined with strong corporate balance sheets to fuel the equities market, including the stocks of local interest tracked by BusinessWeekly.

The gainers were led by Nexstar Broadcasting Group Inc., whose share value grew an eye-popping 436 percent for the year.

Of shares in the 72 publicly traded companies with a significant presence in Northeast Pennsylvania, only two lost any value at all through 2013. Most saw double-digit gains. Stocks performed spectacularly well. The Dow Jones Industrial Average and the S&P 500 both surged to levels that call to mind heady returns of the 1990s. The NASDAQ was up 38 percent.

The Federal Reserve Bank's transparency in how it planned to gradually tighten monetary policy removed some uncertainty and was a big reason why stocks chugged forward in 2013, said Bryan Kupchik, financial planner with Capstone Wealth Management Group in Clarks Summit.

"Interest rates were still low, and the stock market showed the greatest potential for growth of investors' cash," he said. "Corporate America is in great shape, national economic numbers were good, and people had more confidence."

Media and entertainment were booming sectors, Mr. Kupchik said. Beyond their own strong performance, television station operator Nexstar Broadcasting benefited tangentially from being part of that sector as it rebounded from years of being undervalued.

Another dogs-turned-bull is Rite Aid Corp. Retail analyst Howard Davidowitz, of New York City-based Davidowitz & Associates, said Rite Aid's management deserves some credit for its moves, which allowed it to avert huge financial problems. But the walk back to solid, competitive footing will be a long one, he said. Some of Rite Aid's stock value gains of 272 percent in 2013 may be related to the overall positive performance of drug stores. Walgreens and CVS had very good years, as well, he noted.

Another company making a long slog back is Dunmore-based First National Community Bancorp, which followed a charted turnaround in 2013, returning to profitability and getting closer to meeting regulators' requirement. Share value increased 187 percent.

Showing its strength in the financial sector, Prudential Financial rallied 77 percent, the fourth biggest gainer. Such gains are not uncommon for finance and brokerage companies when markets do this well, Mr. Kupchik said.

EXCO Resources Inc. labored under debt of more than a billion dollars as natural gas prices deteriorated. The company spent 2013 divesting and acquiring assets, trying to rebalanced its holdings. And shares of shopping center operators Pennsylvania Real Estate Investment Trust saw anemic growth during the year due to the overhang of rising interest rates, which typically hurts real estate investment trusts' stock value, Mr. Davidowitz said.

Industrial equipment dealer Fastenal Co., fell because of failures to meet earnings targets during the year, and ended the year warning of slower sales. Similarly, AEP Industries Inc., a plastic film and packaging producer, saw sales slide as it dealt with integration of recently acquired companies.

Mr. Kupchik predicts that 2014 will be another good year. Perhaps not a repeat of the 30 percent blockbuster like 2013, but a good year.

Contact the writer: dfalchek@timesshamrock.com

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